Calgary Condos

[weeze]

My wife and I have in the past acquired a real estate portfolio with properties in Calgary, Edmonton and Hinton. We did apartment condos, townhouses, detached homes and apartment buildings. Mistakes were made along the way and we had to slow down, downsize and find our footing again. Now we feel ready to jump right back in and are looking at getting into the Calgary condo market.



Based on personal experience, we consider condos to be one of the easiest type of asset to buy and manage. We are looking at entry level units that we believe are more liquid than other types of real estate. We are not exactly in our twenties anymore and this is becoming an important aspect of our investing.



The issue is we cannot agree on where to buy. She works as a PM and sees the strong demand for properties in the SW and so would like to focus on that segment of the City. I only see cramped roads, difficult commutes and high purchase prices. On the other hand I am interested in the NE communities of Martindale, Castleridge, Taradale, Saddleridge simply because of all the new infrastructure projects coming their way: Ring road, LRT stations, Recreation Centres, Public Library etc.



She considers these areas to be difficult to rent and would rather avoid them altogether. But really, you could hop on a train in Taradale, get to a Superstore within minutes and go back home the same way. From the same place you could also walk to a recreation centre or take a stroll to the library to pick up some reading material. Shouldn't these attributes soon command higher rents and good equity-building tenants?



Am I missing something there? I would greatly appreciate your comments.

 

[Rickson9]

[quote user=weeze]She considers these areas to be difficult to rent and would rather avoid them altogether. But really, you could hop on a train in Taradale, get to a Superstore within minutes and go back home the same way. From the same place you could also walk to a recreation centre or take a stroll to the library to pick up some reading material. Shouldn't these attributes soon command higher rents and good equity-building tenants?


If your logic is correct why are the properties difficult to rent?

 

[weeze]

Maybe the wording was misleading. It is her experience that the majority of good tenants (read equity-building) are more willing to pay extra dollars to live in the SW. There might be a bias against living in the NE communities mentioned in my post, I don't know.



The fact is some parts of the North East have now access to amenities that were completely non-existant just a few short years ago. Shouldn't these areas be in higher demand at this point? In other words isn't there a solid opportunity of increased cash flow/appreciation in the near future or am I missing the glaring point that should drive me away?

 

[RedlineBrett]

[quote user=weeze]Based on personal experience, we consider condos to be one of the easiest type of asset to buy and manage. We are looking at entry level units that we believe are more liquid than other types of real estate. We are not exactly in our twenties anymore and this is becoming an important aspect of our investing.


Most of this is true. There are lots of condos out there though, and while they are liquid they are no better than townhouses or small houses or suited homes. It isn't until you get up into the 4plex + space that it takes longer to sell.



[quote user=weeze]On the other hand I am interested in the NE communities of Martindale, Castleridge, Taradale, Saddleridge simply because of all the new infrastructure projects coming their way: Ring road, LRT stations, Recreation Centres, Public Library etc.



She considers these areas to be difficult to rent and would rather avoid them altogether. But really, you could hop on a train in Taradale, get to a Superstore within minutes and go back home the same way. From the same place you could also walk to a recreation centre or take a stroll to the library to pick up some reading material. Shouldn't these attributes soon command higher rents and good equity-building tenants?


We run a PM company and I would agree with your wife's line of thinking. Calgary real estate is pretty efficient, and you generally get what you pay for. The higher prices in the SW usually come with higher rents, lower vacancies and a better tenant profile. You are paying more for less risk. I am advising clients that invest in your asset class to purchase in older complexes next to newer developments (West LRT, MRC expansion + commercial park, new hospital in the deep south etc).



The NE looks good on paper, but generally speaking the tenant profile has more applicants per suite, more crime and the communities have a higher tenants / owner ratio which gets reflected in the general upkeep of the community. You are picking condos for ease of management after all, so I would suggest you press on with this mindset and go for the best tenant profile you can and still make money.

 

[bizaro86]

[quote user=weeze]There might be a bias against living in the NE communities mentioned in my post, I don't know.





The Calgary RE market absolutely has a bias against the NE. Tenants share this bias, which is why it's more difficult to find good tenants in the NE and northern part of SE. Of course, prices are also lower.



Personally, I've focused on older apartment style condos, where the age holds down the purchase price more than the rent, and I've bought them mainly (>70%) in the SW. I also like the inner city north.



If those infrastructure improvements eliminate the bias against the NE, you'd absolutely have huge appreciation. I personally doubt that will happen, based on how I hear "NE" and "Forest Lawn" used in conversation.



In terms of keeping work to a minimum, my one condo in a downtown (included in SW above) highrise is easily the least work. It's also the only condo downtown I've seen that I was completely comfortable with getting cashflow in the last 4 years of checking daily.



Regards,



Michael